Fatih Birol, director of IEA. (Image source: Foreign and Commonwealth Office/Commons)According to the latest five-year oil market forecast from the International Energy Agency, global oil supply could struggle to keep pace with demand after 2020, risking a sharp increase in prices, unless new projects are approved soon

According to Oil 2017, the IEA's market analysis and forecast report, that was previously known as the Medium-Term Oil Market Report, the global picture appears comfortable for the next three years but supply growth slows considerably after that. The demand and supply trends point to a tight global oil market, with spare production capacity in 2022 falling to a 14-year low.

Oil demand will rise in the next five years, passing the symbolic 100 mb/d threshold in 2019 and reaching about 104 mb/d by 2022. Developing countries account for all of the growth and Asia dominates, with about seven out of every 10 extra barrels consumed globally. India's oil demand growth will outpace China by then. While electric vehicles are an important factor for oil demand, the IEA estimates they will displace only limited amounts of transportation fuel by 2022.

Within OPEC, the bulk of new supplies will come from major low-cost Middle Eastern producers, namely Iraq, Iran, and the United Arab Emirates. Others like Nigeria, Algeria and Venezuela will decline. For its part, production from Russia is forecast to remain stable over the next five years.

The report also highlights changes in international oil-trade flows and investments in storage infrastructure. Asia will need to look beyond the Middle East to meet its growing import requirements. With OPEC countries focused on boosting domestic refining capacity to meet local demand and ramp-up exports of refined products, additional crude oil exports from Brazil and Canada will be higher than those from the Middle East.